Microsoft CEO Search Reportedly Narrowed to Two

And then there were two, if recent reports are to be believed. Ford CEO Alan Mulally and Microsoft Executive Vice President Satya Nadella are apparently the top two candidates for the CEO job at Microsoft, with two wild cards, Tony Bates and Stephen Elop, remaining as only distant possibilities for the post.

The report of the narrowed CEO search decision comes from Bloomberg, which has been reliable and credible in the past. The report cites unnamed Microsoft insiders as stating that Mr. Nadella, who currently oversees the firm's cloud and enterprises business, and turnaround guru Mulally have risen to the top after months of search efforts.

There's just one problem: They couldn't be more different.

A former Boeing executive, Mr. Mulally was famously asked to run Ford when William Clay Ford, Jr. determined he was unable to lead the car maker into its next growth phase. At the time, the decision was criticized because Mr. Mulally had no auto industry background, but Ford's subsequent dramatic turnaround—it was the only US automaker that didn't need federal assistance during the automotive industry crisis of 2008—and Mulally's decisive moves end any criticism.

Mr. Nadella, meanwhile, is in many ways the ultimate Microsoft insider. With the firm since 1992, he led Microsoft's $19 billion Server and Tools business, architecting its seamless transition from on-premises server solutions to cloud computing.

The attraction to Mr. Mulally is obvious: Though he is a tech industry outsider, he previously turned around a business in which he was also initially an outsider. But he's also likely to be a short-timer: At the age of 68, he'd been planning to retire from Ford in 2014. And Ford resolutely claims he's unavailable. "Alan remains completely focused on executing our One Ford plan," a Ford statement notes. "We do not engage in speculation."

Nadella is well respected within Microsoft, and of course the business he led could serve as a model for the rest of Microsoft. But there is a growing worry that Microsoft needs real change, and that that change cannot come from someone who endured the endless internal politics of the past 20 years at the firm.

Of course, Microsoft's CEO role is complex, and finding a single candidate who can understand and speak fluently about the company's many divergent product lines is a difficult task. Microsoft's board of directors met two weeks ago to discuss its progress in finding a new CEO and although it originally hoped to be able to announce its decision this year, the board is now expected to push that back to early 2014.

The next CEO must have an "extensive track record in managing complex, global organizations within a fast-paced and highly competitive market sector [and a] track record of delivering top- and bottom-line results," internal documents obtained by Bloomberg note. "[He or she must have the] proven ability to lead a multi-billion dollar organization and large employee base."

As for Tony Bates and Stephen Elop, the two erstwhile Microsoft executives—Bates came to Microsoft with Skype, and Elop is set to return to the firm when it concludes its purchase of Nokia's devices and services businesses—they remain long shots.

But Mr. Bates is apparently a favorite of Microsoft's employees, according to a report in All Things D. He's seen as the right combination of insider and outsider, and because of his extensive Silicon Valley experience, his rise to CEO could signal a new era of cooperation between Microsoft and its competitors and partners. That view ignores the hard reality that Microsoft's integration of Skype technology into its other products has been downright disastrous. Indeed, though ostensibly a part of Microsoft, Skype appears to be run as an independent business that appears clueless to the needs of customers served by other parts of the company.

Discuss this Article 12

Whoever gets elected emperor at Redmond (really, a board electing a CEO is the closest thing to the Senate electing a Roman emperor) I hope he will realize desktop PCs are alive and well and need a desktop PC operating system, not a tablet OS.

Skype is strictly minor league, imo--always has been. Elop would be as big a disaster as he's been elsewhere. Mulally isn't qualified to run Microsoft simply because he runs Ford (where these ideas come from is unknown--I guess they come from investors who can't quite grasp the difference between an automobile manufacturer and a software company. Go figure. Besides, Mulally is smart enough to know it even if nobody at Microsoft does, and he's already turned it down. It's just that Microsoft isn't listening very well--which has been the company's core problem for the last five years or so. After Win7 the company just stopped listening. Unbelievable.)

Microsoft needs to hire from within, with heavy board oversight from Gates, and the very *last thing* the company needs is some shmuck trying to "change" the company by ripping through it for the sake of change. What Microsoft needs to do is *improve* upon what it has consistently done right for the last twenty years. A return to core values, core directions and strengths is more than called for at this juncture--Microsoft needs, for some wild and crazy reason, to relearn its corporate identity.

The fact is that customers did not come clamoring to Microsoft for the Windows 8 Metro UI, or for tablets--and certainly not for a version of Windows for ARM that is completely incompatible with x86 Windows. Microsoft had become so out of control and inept that it couldn't even launch xBone in a smooth and satisfactory manner. All those supremely bad ideas come from within Microsoft itself--without much of anything in the way of market research to justify them and the results to date tell the tale. Amazing--really amazing. Textbook "how not to's..."

Microsoft does not need to "change"--except to undo all of the useless "change" the company has burned barrels of money chasing for the last few years--changes that 9 out of 10 Microsoft customers never sought. Instead, Microsoft should spend its R&D money improving on Microsoft's current successes and strengths--all of which have room for much improvement--improvement for decades to come, actually.

Basically, I believe that if Microsoft decides it no longer wishes to *be* Microsoft any longer, and that it wishes to copy some other company, instead, some other company with a completely different, alien business model--then I think we can all say "Goodbye!" to the company and put our pictures in our "memory lane" scrapbooks and close them up for good. Alas, poor Yorick....etc.

Microsoft doesn't need someone to come in and gut the company in search of an extra $5-$10 a share just so aholes like valueact can sell and walk away leaving them crippled and unable to compete with google in the consumer space. If that's what you're looking for don't buy MSFT stock. MS is in it for the big picture and finally on track. Selling Bing off would hurt so many of their core products and their growth products that you have to completely not understand what's going on there to even consider it. With Rudders new role a business guy like KT would now work, aa would SN. Mulally would if he's smart enough to ignore outside pressure to cripple their future for meaningless short term gains. Google would give anything to see Bing sold off, cortana killed, and the task completion ai killed for all other enterprise and consumer products. That should tell you everything you need to know.

1. He is a favorite of Microsoft employees.
2. He can speak fluently about the company's many divergent product lines.
3. Stock price has been going through the roof over the past year.
4. Ballmer has extensive track record in managing complex, global organizations within a fast-paced and highly competitive market sector [and a] track record of delivering top and bottom line results.

I don't get the »attraction of Mulally«: Microsoft has very different problems compared to when he took over the helm at Ford. He's not just an outsider, but also relatively old, and I would guess he'd remain CEO for only something like 5 years (can you imagine a 78-year old CEO running Microsoft?).

The biggest problem Microsoft faces right now is a lack of vision, what kind of company does it want to be when it grows into its next phase of life? That's the question the new CEO needs to answer.

To me, the only reason why Mulally is apparently such a strong candidate is that the power that be at Microsoft haven't figured that out yet and he will serve as an interim CEO whose job is to find the next »real« CEO. But does MS have that much time left?

Paul, if your description of how Nadella ran the Server and Tools division is accurate - that is, that he effected a "seamless transition from on premises server solutions to cloud computing" - then it sounds like he ran his division very much unlike the way the others are run, or the way the company is run as a whole. Servers and Tools appeared to be run in a manner that was both boldly forward-thinking and as a model of efficient execution. In other words, it sounds like a very "un-Microsoft" MS division.

If he could impose his approach on the rest of the company, that'd pretty much be all the fresh thinking MS needs.

Personally, I'd worry about appointing a "favourite" of employees, like Bates. Managers that avoid tough decisions tend to become employee "favourites."

Alan Mulally Sounds good on paper, he did turn around Ford but running a car company and running a tech company are different things. I think you have to have a good understanding of technology to run a tech company. You can't no nothing about technology no matter how good you are at business and run a company like Microsoft. I guess if you have some advisers but if you need someone to advise you and explain everything to you are you still going to make the right decisions.

If someone comes up to you and says "we should do this with skype" or "This with Azure" and the person doesn't understand it or "we should get rid of this or that". How about a more complex decision, what platform to get rid of Windows Phone and make Windows RT for all handhelds or get rid of RT and make Windows phone for all handhelds? How is someone with no knowledge of tech going to make that decision? What are advisers going to tell him and are they going to give him the right decision.

So yes on paper he sounds good but in reality I don't know if he would be able to pull it off.

I also agree that maybe someone from within Microsoft might not make a good CEO because there has to be change. Someone who is use to the policies at Microsoft now might not be able to change them correctly or quickly enough.

Basically you need someone who will look a the big picture and be able to see what products work and which don't and which could work with some tweaking or putting it with an existing or new product.

Nadella seems logical if Microsoft is betting on services. However, I think a big part of Stockholders want to see Microsoft do something in the Business and Consumer PC segment. That starts by building killer applications that will not run on tablets (due to lack of horsepower). That likely means spinning up some R & D groups that are given freedom to invent the next thing in computing.

Whoever gets the nod, I hope he'll realize tablets and PCs are NOT the same kind of device, and therefore they require different operating systems.

Seriously, had there been just a start menu in Windows 8, I'd have upgraded to it in a heartbeat. I suffered (she exaggerated slightly) with a Vista Home Basic PC for years. I might even have tried upgrading that one rather than buying a new one (Win8.1 preview ran just fine in a Vista Home premium laptop).
Instead I kept it for a year longer and recently obtained a Windows 7 PC (more beacuse of the price and processor and screen, than for my dislike for Win8; but the latter was a factor).

Your point just highlights the nonsense of this development. They have restructured and acquired and engineered themselves into an Amazon/Google style cloud/mobile company.

How do Mulally or Nadella further that goal? Nadella should be picked only if they re-trench around Enterprise IT, which would be insane after the Nokia acquisition.

Now I'm sure Nadella is very knowledgeable outside his area, but the truth is that CEO is a job about connections and values. He doesn't have a mobile background.

Mulally is worse. Just because it worked at Boeing and Ford doesn't mean MS is a slam dunk, far from it. MS STILL really doesn't do manufacturing, and the current MS strategy should be heavy on retail (for xbox and Surface and win8 and the stores). Mulally has not had to worry about 'normal' consumer retail, the car business is a very different animal.